Student Loan Defaults at Record Low

President Clinton announced Monday that students are paying back their student loans at an unprecedented rate, saving taxpayers billions.

The rate at which Harvard students default on their loans has also fallen, the government said.

According to the Department of Education website, 1.5 percent of Harvard students with loans default, a decrease from 2.6 percent two years ago.

Harvard's rate is far lower than the national average of 4.5 percent for students at four-year private colleges.

"The rate has been well below average for years and years," said Jannette M. Parks, Harvard's manager of federal and state aid.

Parks said Harvard's low rate appears to be a result of "responsible students who take their educations and the funds available seriously."

Nationally, the rate at which students default on their loans has steadily decreased from a high of 22.4 percent in 1992 to a low of 6.9 percent this year, according to a Department of Education press release.

Secretary of Education Richard W. Riley said in the release that the decrease has saved U.S. taxpayers $18 billion when combined with increased collections and savings from new direct loan programs.

Riley added that the low rate of defaults is especially significant because it occurred despite the fact that the "loan volume has tripled and the number of loans doubled" during the eight-year period.

According to a White House press release, the decrease in loan defaults can be credited to "the strong economy, more scholarship aid and tax credits for college, more affordable student loans, and flexible repayment plans," as well as the efforts of schools themselves.

The decrease from last year's 8.8 percent can also be attributed in part to a change in the law that extended the time before a student is declared to be in default from 180 to 270 days.

Jane Glickman, of the Department of Education public affairs office, stressed that "flexible repayment plans according to income and extended payment plans" have helped students to avoid defaulting on their loans.

Credit for the decrease can also be given to better enforcement and administration of the loan program by schools, Glickman said.

Harvard's Office of Undergraduate Admissions and Financial Aid, for example, tries to ensure that students do not default by distributing a brochure entitled "Debt Be Not Proud," which contains information about paying off debts.

Parks said that Harvard also requires graduating students to attend an "exit interview" about their loan obligations with the financial aid office.

"Many students aren't ready to retain information [about paying off loans] until actually going out into the world," she said.

"Defaulting can prevent you from buying a car or house, or renting an apartment," Parks added. "I think it can work against you when applying to law school [and other institutions]."

In May, Harvard plans to launch a website that provides the same services as the exit interview.

Aaliyah N. Williams '02 of Dunster House said she is optimistic about her chances to repay her student loans.

"Hopefully I'll have a good job and be able to pay them off," she said. " I'm not planning on defaulting, and I don't know anyone who is."